U.S. Stocks Drop as Retail Sales Slump

U.S. stocks slid the most in six weeks, following European markets lower, as a government report showed retail sales slumped at more than twice the rate forecast by economists last month.

General Motors Corp., Macy’s Inc. and American Express Co. tumbled at least 5 percent after the Commerce Department said purchases decreased 2.7 percent in December as job losses and dwindling access to credit forced consumers to reduce spending. Citigroup Inc. slid as much as 21 percent as Chief Executive Officer Vikram Pandit works to unravel the financial-services empire following four straight quarters of losses.

“The economy is going to feel really bad and we’ll continue to get negative headline news,” said Eric Green, director of research at Penn Capital Management, which oversees $3 billion in Cherry Hill, New Jersey. “There’s massive stimulus that we’ve never seen before coming. That will help the consumer.”

The Standard & Poor’s 500 Index lost 3 percent to 845.46 at 1:02 p.m. in New York and dropped as much as 4 percent, its steepest plunge since Dec. 4. The Dow average slumped 229.14 points, or 2.7 percent, to 8,219.42. The Russell 2000 Index fell 3.4 percent. The Dow Jones Stoxx 600 Index of European shares tumbled 4.4 percent for its sixth straight retreat.

All 24 industry groups and 487 of the companies in the S&P 500 fell following the sixth consecutive monthly decrease in retail sales, the longest stretch of declines in records going back to 1992. The VIX, which gauges the cost of using options as insurance against losses in the S&P 500, jumped 17 percent for its biggest gain since Dec. 1.